Estate tax changes loom over Florida farms

On behalf of Levins & Associates, L.L.C. posted in Estate Planning on Thursday, November 29, 2012.

While people up north might think of Florida as a vacation getaway, those of us who live here understand that our state is one of the top ten in the nation in terms of agricultural production.

Farmers here and across the nation are pushing the lame-duck Congress to extend the $5 million estate tax exemption and top estate tax rate of 35 percent, according to news reports.

If Congress doesn't act by the end of the year, the estate tax exemption automatically reverts to a $1 million per person exemption with a top estate tax rate of 55 percent. The change was written into the Unemployment Insurance Reauthorization and Job Creation Act of 2010.

An official with the Minnesota Farm Bureau said, "Individuals, family partnerships or family corporations own 98 percent of U.S. farms."

The changes in estate taxes are part of the negotiations taking place between President Barack Obama and House Speaker John Boehner.

Despite the economic slowdown of the past few years, one farmers advocate said more and more farmers exceeding the looming $1 million exemption.

One estimate said farmers would be affected by the new, lower exemption if they own 247 acres or more. That works out to a little over $4,000 per acre. Of course, for more valuable property, the number of acres needed to exceed the exemption drops accordingly.

U.S. Sen. John Thune of South Dakota said 71 percent of the farms in his state would exceed a new $1 million estate tax exemption.

"Since many family farm and ranch assets consist of land, livestock, equipment and small cash reserves, this punitive tax leaves the next generation with little choice but to sell family holdings to pay the death tax," Thune said.

People who own farms or other businesses should discuss their options with an experienced estate planning attorney before making changes to wills or other aspects of their estate plan.

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